Web3 Law Popularization丨What should you do if someone refuses to give you the USDT after you transfer money to them?

The Popularization of Web3 Law丨When Someone Refuses to Send You USDT After a Money Transfer What You Should Do

Author: Lawyer Wei Fuhai

01. The Return of the Missing Person

It has been almost two months since I last wrote an article. Let me clarify in advance, it’s not that I’m lazy, but I have been busy with some major life events, which took up a lot of my time. In addition, all the courts are rushing to close cases by the end of the year in order to improve their case closure rate. I’ve attended several court hearings to cooperate with the judges in increasing the case closure rate. Especially recently, I’ve been dealing with a criminal case involving allegations of rape, which has taken up most of my time. I have already visited the detention center eight times so far, and the cost of fuel and tolls has been quite substantial. This case is also quite interesting. When the case is declassified at an appropriate time, I will share the details with everyone.

But let’s get back to the point. A while ago, a client who invested in virtual currencies added us on WeChat and consulted us on a problem. This problem is quite representative and many cryptocurrency enthusiasts may have encountered it before – it’s about the loss of interests in over-the-counter transactions. This client, unlike others, had a slightly different situation. Now I will tell you what issue this client encountered.

Let’s call this client who consulted us as “Party A.” Party A wanted to purchase cryptocurrency U from a friend who Party A had known for some time, let’s call this friend “Party B.” The transaction model between them was that Party A would transfer money to Party B first, which is like Party A placing an order with Party B, telling Party B how much U they wanted to buy. After Party B received the transfer from Party A, Party B would then transfer the agreed amount of U to Party A, completing the transaction.

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This transaction model is quite common, and some players also use this method to purchase USDT (also known as U) in the same way. However, there was a problem that occurred during the transaction process between Party A and Party B. After Party A transferred money to Party B, Party B did not transfer the U to Party A within the agreed time. Party A asked Party B what was going on, and Party B replied that their account was frozen and they couldn’t transfer the U. This went on for two months, with Party B always replying that their account was still frozen and not yet unfrozen, and they would transfer the U to Party A after it was unfrozen. In October of this year, Party A asked Party B again, and Party B’s reply was still that their account was frozen. Party A couldn’t let this continue and decided to report to the police.

Party A was well-prepared when reporting to the police, bringing along both the chat records and transfer records between the two parties. The police accepted Party A’s report and conducted the necessary investigations. After the investigation, the police told Party A that their statement in the report was true, but the other party’s actions did not constitute fraud. They suggested that Party A resolve the issue through civil remedies.

02. Cryptocurrency Dispute: Criminal or Civil?

So the question is, is this a criminal case or, as the police say, a civil case for Mr. A?

From what I currently know, it seems that the issue Mr. A is facing should be treated as a criminal case. But why did the police say it does not constitute fraud? I suspect that the police considered it from the perspective of the “Notice 94” and other documents, denying the property attributes of virtual currency. Since virtual currency is not property in the legal sense, any charges related to property rights would not be related to Mr. B. However, when Mr. A was speaking to us, he did not clarify the specific reasons why the police did not file a case. Is it because they believe that virtual currency does not have property attributes and therefore do not file a case, or is it because Mr. B did not commit fraud and therefore do not file a case? I have already mentioned the lack of property attributes (but it does not rule out that some public security organs in certain regions gradually recognize the virtual property attributes of virtual currency in criminal cases involving property crimes). So, what are the possible situations where there is no fraud? For example, after receiving the money, Mr. B did indeed purchase U from others, and his account was indeed frozen. However, after the unfreezing, Mr. B had some malicious intentions, and used up the virtual currency that should have been transferred to Mr. A or sold it to others. This does not fall under fraud.

Therefore, returning to the theme of this article, if someone purchases virtual currency from another party and the other party does not deliver, it could either be a criminal case or a civil case. Is it the same as not saying anything? This needs to be treated differently depending on the circumstances. If the public security organ in the place where the case occurred does not recognize the property attributes of virtual currency, or if there was an intention to occupy during the transaction, or if the transaction could not proceed smoothly due to unexpected reasons, then it does not fall under the jurisdiction of criminal fraud. We can only solve the problem through civil litigation.

There is also a difference in opinions among different local courts when it comes to transactions involving virtual currency through civil litigation. For more details on these differences, please refer to the article “Can I sue someone for borrowing Bitcoin virtual currency?” written by our other expert lawyers. Although the title of the article is “borrowing,” the content is essentially the same as the transaction.

03. Attorney Manjun’s Advice

In conclusion, when dealing with situations that can go either way, it is difficult to solve the problem through the only available means. Recently, I took on a case where the defendant was accused of embezzlement. Since embezzlement is a “private prosecution” offense, if the party involved does not file a criminal private prosecution to the court, the public security organs and other criminal investigation agencies will not investigate it proactively. After the case was filed with the court, the court’s initial review found that I did not provide evidence that they have jurisdiction over the case, so they rejected the case. So I modified the complaint and evidence catalog, reminding the court that they have jurisdiction over the case, and the court showed me the reason for rejecting my complaint, and it made me laugh, “Do not agree to file a case, suggest resolving it through civil litigation.” Do you understand what the court means? The reason is, strictly speaking, this is a criminal case, and I should have jurisdiction over it, but you can also resolve the relevant issue through civil litigation, so I will not file a case for you.

The reason I talk about the process of filing my case is to remind all the virtual currency players who have been cheated that some cases can indeed be pursued both criminally and civilly. If the criminal path is not feasible, then try the civil path. As long as the problem can be solved, it doesn’t matter which path you take. After all, all roads lead to Rome.

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